Archive for May, 2006

How can credit counseling help me avoid bankruptcy?

If you have a lot of credit card debt or other types of debt, there are two very common ways to eliminate your debt: consumer credit counseling or personal bankruptcy.

Personal bankruptcy may be an option for you, but there are a number of disadvantages to personal bankruptcy.

First, no-one wants to go bankrupt. Second, with a bankruptcy on your credit report it may be more difficult to borrow in the future. Third, there are costs associated with bankruptcy, including legal fees.

For those reasons, many people use credit counseling as a way to avoid bankruptcy. People go bankrupt to stop their creditors from calling, and to prevent legal action. Credit counseling can accomplish the same objective.

Your credit counselor will put you on a Debt Management Program where you make one payment each month to deal with your debts. Once the payment plan is in place, your creditors are no longer calling or threatening you, so credit counseling becomes a great strategy to avoid bankruptcy.